Prosus NV will sell more of its $134 billion stakes in Chinese internet company Tencent Holdings Ltd. The proceeds will finance a buyback plan. This reverses a promise to keep the whole shareholding. Prosus NV . is a Dutch worldwide corporation firm that is the intercontinental Internet belongings unit of South African multinational Naspers. Prosus NV is a technology investor and will tap its huge stake in China’s Tencent to pay for a stock buyback. The Dutch firm also stated that the parent Netpers would be repurchased.
Tencent shares fell in Hong Kong Monday as investors wondered if Prosus (the largest Chinese shareholder) would sell off its stock. The shares closed at 1.6% less and fell by as much as 2.5%.
Bob Van Dijk (CEO) stated that Tencent shares will be sold to continue buying back its own. He explained that disposals will occur in small pieces, accounting for 3% to 5.5% of daily trading volumes. Prosus, a Dutch e-commerce giant that is majority-owned by South Africa’s Naspers Ltd., has announced that it will change its mind and sell more shares after its April 2021 last sale.
The 29% stake is owned by Prosus, which was spun out of Naspers in 2019. This happened after its parent became a Tencent investor two decades earlier. This resulted in a multibillion-dollar profit and one of the most profitable early tech investments ever made. Prosus shares increased 18% in Amsterdam by 1 p.m. on March 1, while Naspers gained 24% in Johannesburg.
Prosus’s stock value rose to 120billion euros ($127billion) following the share leap, which narrowed a long-standing discount on the $134billion Tencent stake. The market values Prosus’s remaining assets, which include food delivery and online education sites around the world, at a lower than zero because of this discrepancy.
Prosus declared that this situation is “unacceptable” after years of convincing markets it was under-appreciating his company. John Davies, Bloomberg Intelligence analyst said that Prosus is now “finally accepting” that this is the best and possibly only way to close 30% off. “The planned announcement could quickly reduce the gap.
Other value-creation efforts may take longer simply due to investment horizons.” Prosus reduced its full-year operational loss to $859M in the year to March from $1B, although core headline earnings per stock — Prosus preferred measure for analyzing its finances — decreased. Bob Van Dijk (CEO) stated that Tencent shares will be sold to purchase new shares.
This program is unlimited and open-ended. He explained that disposals will occur in small pieces, accounting for 3% to 5.5% of daily trading volumes. Prosus, a Dutch e-commerce giant that is majority-owned by South Africa’s Naspers Ltd., has announced that it will change its mind and sell off more shares. This move comes after the company’s April 2021 last sale.
The 29% stake is owned by Prosus, which was spun out of Naspers in 2019. This happened after its parent became a Tencent investor two decades earlier. It has accumulated a multi-billion dollars in one of the most profitable early bets ever made in tech investment history. Prosus shares increased 18% in Amsterdam by 1 p.m. on March 1, while Naspers gained 24% in Johannesburg.
Prosus revealed the Tencent shares plans on the same day that it reported almost $4 billion in stock sales at JD.com Inc. Tencent received a special dividend from Tencent. JD.com gained 6.2%. These deals raise questions about the long-term viability of shares in Chinese internet companies, which have been under intense scrutiny by Beijing for more than a decade.
Prosus’s investment in Tencent is still wildly in cash, but they are selling it after Tencent lost approximately half its value from a peak of 2021. This was due to the government’s campaign to limit the power of the country’s largest internet corporations. According to a statement from Prosus, Naspers and Prosus had “full confidence” about Tencent. They will oversee the orderly sale of stock.
